Correlation Between Reckitt Benckiser and BASF SE
Can any of the company-specific risk be diversified away by investing in both Reckitt Benckiser and BASF SE at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Reckitt Benckiser and BASF SE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Reckitt Benckiser Group and BASF SE ADR, you can compare the effects of market volatilities on Reckitt Benckiser and BASF SE and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Reckitt Benckiser with a short position of BASF SE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Reckitt Benckiser and BASF SE.
Diversification Opportunities for Reckitt Benckiser and BASF SE
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Reckitt and BASF is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Reckitt Benckiser Group and BASF SE ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BASF SE ADR and Reckitt Benckiser is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Reckitt Benckiser Group are associated (or correlated) with BASF SE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BASF SE ADR has no effect on the direction of Reckitt Benckiser i.e., Reckitt Benckiser and BASF SE go up and down completely randomly.
Pair Corralation between Reckitt Benckiser and BASF SE
Assuming the 90 days horizon Reckitt Benckiser Group is expected to generate 0.49 times more return on investment than BASF SE. However, Reckitt Benckiser Group is 2.03 times less risky than BASF SE. It trades about -0.15 of its potential returns per unit of risk. BASF SE ADR is currently generating about -0.2 per unit of risk. If you would invest 1,287 in Reckitt Benckiser Group on September 2, 2024 and sell it today you would lose (45.00) from holding Reckitt Benckiser Group or give up 3.5% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Reckitt Benckiser Group vs. BASF SE ADR
Performance |
| Timeline |
| Reckitt Benckiser |
| BASF SE ADR |
Reckitt Benckiser and BASF SE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Reckitt Benckiser and BASF SE
The main advantage of trading using opposite Reckitt Benckiser and BASF SE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Reckitt Benckiser position performs unexpectedly, BASF SE can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in BASF SE will offset losses from the drop in BASF SE's long position.| Reckitt Benckiser vs. LOral SA | Reckitt Benckiser vs. LOreal Co ADR | Reckitt Benckiser vs. Unilever PLC ADR | Reckitt Benckiser vs. Kimberly Clark |
| BASF SE vs. South32 Limited | BASF SE vs. NioCorp Developments Ltd | BASF SE vs. HUMANA INC | BASF SE vs. SCOR PK |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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